NAR deal ‘could be detrimental’ to Black agents, buyers 

How will the NAR settlement — and specifically, the industry rule changes set to go into effect this summer — impact Black homebuyers and sellers? While some of the changes, such as mandatory buyer agent agreements, are meant to increase transparency in the way consumers buy and sell homes, there could also be some unintended consequences.

Real Estate News recently spoke with Dr. Courtney Johnson Rose, president of the National Association of Real Estate Brokers — an organization that represents more than 18,000 Black real estate professionals — about the upcoming changes and how they could affect Black consumers and industry pros alike. This interview has been edited for length and clarity.

What were your and NAREB's initial reactions to the NAR settlement?

If the proposed settlement goes all the way through, it could be detrimental to our organization's agents. Our members work as agents, brokers, appraisers, property managers, etc. in this industry, and our primary clients are Black homeowners. 

In our community, most of our homeowners are first-time homebuyers, and in many cases first-generation homebuyers, so it's really important for them to have representation. We are concerned because these changes can create an added burden to already burdened homebuyers. If you're trying to get money together for down payment and closing costs, paying the agent on the buyer side could create another hardship.

In the wake of the NAR settlement, NAREB announced it was going to form a task force. Who's on it, what are the goals, and what is the timeline?

The task force is a combination of NAREB members from different parts of the brokerage industry. We have some franchises that are part of it, as well as some of our smaller to mid-sized independent brokers. The main goal of the task force is to look at how we prepare members for the potential shift. What are some things that our members need to actually know and have? 

Our goal is to have this toolkit — new templates, forms and scripts — ready by the end of May. A lot of our members have not had to have these difficult conversations before and to this extent, so we'll have some scripts and some presentations that can become part of our members' buyer consultation. We'll also have some things that we can talk to sellers about. 

Has NAREB engaged with the VA, FHA or other GSEs about changes to financing?

We have not formalized any particular ask with the GSEs. We've been tracking it, but we do feel like this is an industry issue, not necessarily an NAR, Realtors or NAREB issue. When it comes to mortgages — how people get qualified and what they bring to the closing table — that is an industry issue. 

In all of these organizations — the GSEs — they have equity plans to increase Black homeownership and Hispanic homeownership, so this should be something they are conscious of, and conscious of what the potential effects could be on the minority community.

Some think the upcoming rule changes could increase off-MLS listings. What is NAREB's position on pocket listings?

They can be used as a tool that perpetuates discriminatory practices by deliberately limiting the visibility of property listings, which allows the seller to selectively market the property — potentially excluding Black consumers from even knowing that the property was for sale. We think this could increase the amount of potential discrimination in the actual market. 

We come from a history of deed restrictions where in certain communities, people couldn't sell their house to a Black borrower. When you take homes off the MLS and off the internet, you take away the opportunity for everyone to see what's available. We've worked really hard over the past 40-50 years to create a more transparent environment where African American borrowers have access to homes that are on the market. And this creates potentially a new environment where pocket listings are more frequent. 

Recent reports indicate appraisal bias is on the decline. Could the post-settlement landscape jeopardize that progress?

Appraisal bias has been a multi-decade problem in our community. A Black appraiser's point of view or advice typically to a Black family is to depersonalize their home before the appraisal process. And we've been saying this for 30 years, because bias really does happen.

When you add to that the settlement and pocket listings and things of that nature, it's potentially even more dangerous, because the MLS gives an appraiser that data to be able to compare — but with pocket listings, things are less transparent. It makes the potential for bias even more difficult to manage.

How could the NAR settlement have been more equitable?

This has been a five-year journey in terms of the cases and litigation, so it's hard to say what should or could have happened. But I see it really as an industry shift more than one takeaway from just one trade association or one organization. It's going to bring dramatic changes to the industry, and there are always pros and cons. 

But from an organizational standpoint at NAREB, which represents Black real estate professionals and Black consumers, we see the challenges of the burden of paying agents on the buyer side. We see the concern with fair housing with pocket listings, and we see the concern with appraisals.